Obama administration insists there was no quid pro quo, but critics charge payment amounted to ransom

Aug. 2, 2016 7:51 p.m. ET

WASHINGTON—The Obama administration secretly organized an airlift of $400 million worth of cash to Iran that coincided with the January release of four Americans detained in Tehran, according to U.S. and European officials and congressional staff briefed on the operation afterward.

Wooden pallets stacked with euros, Swiss francs and other currencies were flown into Iran on an unmarked cargo plane, according to these officials. The U.S. procured the money from the central banks of the Netherlands and Switzerland, they said.

The money represented the first installment of a $1.7 billion settlement the Obama administration reached with Iran to resolve a decades-old dispute over a failed arms deal signed just before the 1979 fall of Iran’s last monarch, Shah Mohammad Reza Pahlavi.

"The payment is the settlement of a decades-old dispute over returning Iranian funds from a weapons purchase placed by the government of Mohammad Reza Shah Pahlavi before he was ousted. And the delivery of the payment in foreign currency, officials say, was logical because U.S. sanctions prohibit deals with Iran using dollars and the U.S. has no banking relationship with the country.

"The only bit of news that is relevant on this is the fact that we paid cash," Obama said. Restrictions on U.S. banking relationships with Iran mean "we could not send them a check, and we could not wire them the money."